Eyre v Estate Management Services Ltd [1997] FJHC 205; Hbc0407j.92s (30 April 1997)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 407 OF 1992

Between:

PETER GERVAISE JOSEPH EYRE
Plaintiff

and

ESTATE MANAGEMENT SERVICES LIMITED
Defendant

and

MINAMI TAIHEIYO KAIHATSU KABUSHIKI KAISHA
Third Party

Mr. P. Knight for the Plaintiff
Mr. Q.B. Bale for the Defendant
Mr. G. P. Shankar for the Third Party

JUDGMENT

The Plaintiff's Claim

The Plaintiff's claim against the Defendant is for breaches of contracts (the "agreements") dated 25th January 1972 between the Defendant as Vendor and the Plaintiff as purchaser for the sale and purchase of five residential lots (the "Lots") at Pacific Harbour described as Lots 1259, 1260, 1261, 1262 and 1263 on the Proposal Plan of Subdivision approved by the Subdivision of Land Board of Fiji on 9th January 1970 and, as a result of such breaches, for the repayment of the total purchase price of £30,625.00, or alternatively damages for breach of contract, interest on the said sum of £30,625.00 at such rate as the Court thinks fair from 1st January 1973 until judgment and for costs.

The Plaintiff's contention

The Plaintiff contracted to purchase the five lots from the Defendant by sale and purchase agreements each dated 25th February 1972 and that he had paid the purchase price of £6,125.00 for each lot in full, making a total purchase price of £30,625.00. The complete sale and purchase agreement relating to Lot 1259 is document 1 in the Plaintiff's list of documents tendered to Court by consent. The first pages of the sale and purchase agreements relating to Lots 1260, 1261, 1262 and 1263 are documents 2, 3, 4 and 5 of the Plaintiff's list of documents. The remaining provisions of the sale and purchase agreement relating to Lots 1260, 1261, 1262 and 1263 are identical to the corresponding provisions of the sale and purchase agreement relating to Lot 1259.

It is the Plaintiff's contention that in breach of clause 6 of the agreements the defendant has failed and neglected with all "reasonable speed" to have the said land containing the said lots, inter alia, surveyed and to have the plans of the said survey deposited in the Titles Registry at Suva; and, in addition, in breach of clause 8 of the agreements has failed and neglected to execute proper and registrable transfers of the said lots to the Plaintiff.

In its defence and in the statement of agreed facts dated 2 December, 1994 the Defendant admits the various allegations in the Statement of Claim, in that it had failed to have the said land containing the lots surveyed or to have the plans of the said survey deposited and registered in the Titles Registry at Suva or installed a storm water drainage system or a sanitary sewerage reticulation system or caused a reticulation system for the supply of electricity to be installed or caused a reticulation system for the supply of treated water to be installed servicing the lots, that it had not transferred the lots to the Plaintiff (see paragraph 8 of the Agreed Facts) and had in or about 1990 transferred to Third Party certain property at Pacific Harbour including the lots (see paragraph 6 of the Agreed Facts), but denied in its defence that it had breached any of the provisions of clause 6 of the agreements.

Mr. Ami Chand, a registered surveyor, called by the Plaintiff testified, inter alia, that in his experience development works on residential subdivisions in Fiji should be completed within three years of a scheme plan or proposed plan of subdivision being approved and that a developer should be in a position to transfer title to a purchaser within this period.

The witness for the defendant Mr. Vinod Singh said that there was a deliberate decision in 1975 for commercial reasons not to proceed with the development of the remainder of the sub-division including section F (which included the lots in question).

Mr. Knight for the Plaintiff therefore submits that a developer who fails to carry out required development work for a period in excess of twenty-four years i.e. from January 1972 being the date of the agreements to the date of the trial, cannot be said to have proceeded with all "reasonable speed".

Mr. Knight submits that in failing to complete the required works and to transfer title to the Plaintiff of the lots within a period of twenty-four years, the defendant has not proceeded with "reasonable speed", is guilty of wilful delay and is in breach of the provisions of section 6 and 8 of the agreements and is therefore liable to compensate the Plaintiff for his loss. He is asking by way of damages the repayment to the Plaintiff the said sum of £30,625.00 together with interest and costs.

The defendant's contention

The defendant says that it changed its name from Pacific Hotels and Developments Limited to Estates Management Services Limited (the "defendant" herein).

The Agreements between the Plaintiff and the Defendant were made in 1972. By a Deed of Settlement dated 20 March 1990 which was supplemented by a Deed of Indemnity on 23 March 1990 the first Deed settled certain disputes which had arisen in respect of the land in Sections F, J and M ('F' contains the subject lots) whilst the second Deed sets out the rights obligations and liabilities of the parties arising out of the sale by the defendant to Third Party.

The defendant says that because of a number of factors affecting the economy the development of the estate at Pacific Harbour it did not proceed with the works. In 1989 the defendant agreed to sell Sections F etc to Third Party. It complains that after 19 years of lying low the Plaintiff is now seeking to enforce the contract.

Mr. Bale questions as to why the failure to comply on the part of the defendant was not raised until 1991 which is some 19 years after the contracts were entered into.

He says that if the Plaintiff is entitled to repayment, then it is the responsibility of Third Party to pay together with interest.

Mr. Bale says that if the Court holds that the Plaintiff has a valid claim against the defendant then the defendant in turn must rely on its dealings with Third Party in that all matters between the defendant and Third Party were settled by the Deed of Settlement of 20 March 1990 and Deed of Indemnity of 23 March 1990. Then he refers the Court to item 7 of "Agreed Facts" pursuant to which the Third Party agreed to indemnify the defendant against certain claims. The said item 7 reads:

"7. By virtue of the said Deed the Third Party indemnified the Defendant against any and all claims of any nature arising out of the Defendant's failure to complete any of the Defendant's covenants or obligation under agreements entered into by the Defendant for the sale of Lots at Pacific Harbour including the agreements for the sale of the said Lots between the Defendant and the Plaintiff."

He concluded by saying that the above is an acknowledgment of Third Party's liability to the defendant in respect of the five lots.

Mr. Bale therefore submits that if the court concludes that the Plaintiff's claim against the defendant can succeed, then it must also find that the defendant is entitled to be indemnified by Third Party.

Third Party's Contention

In its Amended Statement of Defence Third Party says that the agreement between the Plaintiff and defendant is (a) bad for uncertainty, (b) does not specify any time for carrying out of the development and (c) contains no provision for refund of deposit.

In regards to the two Deeds made between the Defendant and Third Party it says, inter alia, that the first deed is "vague and uncertain" and "in any event it does not extend or cover claim for refund of deposit and/or interest". It says that the second deed is "invalid and/or unenforceable because it deals with existing obligation of the defendant and third party with modification or variation without consideration". It further states that the defendant suppressed and/or concealed material facts from third party that it did not make prompt disclosure of claims received by it. It maintains that the "Plaintiff's action and/or Defendant's claim against it is stale and statute barred" and that "in any event it is inequitable to award any interest". It also states that it was "readily able and willing to carry out development within reasonable time but it did not receive any notice". Alternatively, in its Defence it says that it "offered to give alternative lots to the Plaintiff but the Plaintiff refused."

The issues

The issues for the Court's determination are:

(1) Is the defendant in breach of its obligations under the said clause 6 of the sale and purchase agreements.

(2) If so, what relief is the Plaintiff entitled to?

(3) If so, is the Third Party liable to indemnify the Defendant for any relief granted in favour of the Plaintiff against the defendant?

Consideration of the issues

First issue: Is there a breach by the defendant?

There are certain agreed facts and these are set out in the Minutes of the Pre-trial Conference. It is difficult to comprehend that despite admitting that it is in breach of section 6 of the agreements it still says it is not in breach of any of the clauses.

Upon a careful consideration of the evidence before me, both oral and affidavit, I accept Mr. Knight's submissions in regard to the issues before the Court as between the Plaintiff and the Defendant.

I have no doubt whatsoever that the defendant has completely failed to comply with certain special conditions, namely, clauses 6(a) and (b) and clauses 7 and 8 of the agreements.

The defendant's own witness Mr. Vinod Singh said that the defendant made a deliberate decision to sell the land of the defendant company to Third Party and which it did. These lands also included the Lots in question.

I find as fact that the defendant had no intention of complying with the essential terms and conditions of the agreements as it did nothing from 1972 until 1990 (when it sold the Lots to Third Party), consequently, the Plaintiff never had the Lots transferred to him despite having paid the full purchase price at the time of executing the agreements.

According to the Plaintiff's witness AMI CHAND, a registered surveyor of twenty years experience, development work on residential subdivisions should be completed within three years but here nothing has been done since the agreements were executed. The disinterestedness of the defendant to do anything is borne out by the evidence of its own witness VINOD SINGH when it was decided in 1975 not to proceed with the subdivision. The defendant's clear intention not to subdivide is further borne out by the fact that on 20 March, 1990 pursuant to a Deed it transferred its lands (including the subject Lots) to Third Party and the latter agreed to indemnify the defendant against any and all claims of any nature arising out of the defendant's failure to complete any agreements entered into by the defendant for the sale of the Lots at Pacific Harbour including the agreements for the sale of the said Lots between the defendant and the Plaintiff (this is an agreed fact in the Minutes of the Pre-trial Conference).

On the facts of this case it cannot possibly be said that the defendant proceeded with the works with "reasonable speed" when in fact it did nothing to fulfil the terms of the agreements. No doubt, the agreements are silent as to the time for performance but in such a case the law implies that it should be done within a reasonable time. In ABERFOYLE PLANTATIONS LTD v KHAW BIAN CHENG (Privy Council 1960 A.C 115 at 124) it is stated that:

"....(ii) where a conditional contract of sale fixes no date for completions of the sale, then the condition must be fulfilled within a reasonable time;..."

Further on "reasonable time" in PANTLAND HICK v RAYMOND and REID [1892] UKLawRpAC 51; (1893) A.C. 22 at 32 LORD WATSON said:

"When the language of a contract does not expressly, or by necessary implication, fix any time for the performance of a contractual obligation, the law implies that it shall be performed within a reasonable time. The rule is of general application, and is not confined to contracts for the carriage of goods by sea. In the case of other contracts the condition of reasonable time has been frequently interpreted; and has invariably been held to mean that the party upon whom it is incumbent duly fulfils his obligation, notwithstanding protracted delay, so long as such delay is attributable to causes beyond his control, and he has neither acted negligently nor unreasonably."

'Reasonable time' means a time reasonable in all the circumstances. (MONKLAND v JACK BARCLAY LTD (1951 2 KB 252). That cannot be so in this case on the facts. There was nothing further that the Plaintiff was required to do under the agreements. Although the agreements required that the defendant proceed with the works with "reasonable speed" and no time was stipulated by the contracts themselves for performance of the contracts, the law implies, as I have already stated, an obligation on and undertaking by each party to perform his part of the contract within what is a reasonable time, having regard to the circumstances of the case. (SIMPSON HUGHES (1896), 66 L.J Ch. 143; JOHNSON v HUMPHREY (1946) 1 ALL.E.R. 460). The Plaintiff had fulfilled his obligations having paid the full purchase price and was merely awaiting the transfer of the Lots to him. The defendant had delayed proceeding with the subdivision by not proceeding with it at all and was therefore in breach of the terms and conditions of the agreements and it even went to the extent of transferring the land to Third Party to which the Plaintiff is not privy with all its attendant obligations to the Plaintiff as stated in the Deed of Indemnity.

On the interpretation of the terms and conditions of agreements the following passages from the judgments in the House of Lords case of HILLAS & CO. LTD. v ARCOS, LTD [1932] UKHL 2; (1932) ALL E.R. Rep. 494 are pertinent and I conclude this aspect of the matter with them to show that there have been breaches of the agreements on the part of the defendant.

LORD TOMLIN at p494 on the problem of a court of construction said:

"The problem of a court of construction must always be so to balance matters that, without violation of essential principles, the dealings of men may, as far as possible, be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains".

In HILLAS (supra), it is further stated that the duty of the Court is to construe agreements fairly and broadly and on this LORD WRIGHT at p.494 said:

"It is the duty of the court to construe agreements made by business men - which often appear to those unfamiliar with the business far from complete or precise - fairly and broadly, without being astute or subtle in finding defects; on the contrary, the court should seek to apply the maxim verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as, for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail. Thus in contracts for future performance over a period the parties may not be able nor may they desire to specify many matters of details, but leave them to be adjusted in the working out of the contract. Save for the legal implication I have mentioned, such contracts might well be incomplete or uncertain; with that implication in reserve they are neither incomplete or uncertain".

Second Issue: What relief is Plaintiff entitled to?

Under clause 6(b) of the agreements it is stated that the vendor shall carry out the "survey construction and installation works" "with all reasonable speed". It further states that the "Vendor shall not be in any way liable to the Purchaser for compensation damages or otherwise in respect of any delay which may arise from any cause whatsoever in the completion of such survey construction and installation works other than as a result of wilful delay on the part of the Vendor" (emphasis is added). There was clearly a delay on the part of the defendant (the Vendor). In JONES v GARDINER [1901] UKLawRpCh 188; (1902) 1 Ch. 191 BYRNE J decided that where delay has been caused by default of the Vendor, not in consequence of want of or defect in title or conveyancing difficulties, but by reason of the vendor not having used reasonable diligence to perform his contract, damages could be recovered. He said at 195:

"There is no question in the present case of want of good faith, as evinced by any desire to repudiate the contract, or of fraud; but, having carefully considered all the proceedings and the correspondence and the evidence, I am of opinion that a very considerable part of the delay which has occurred in carrying out the contract (after making full allowance for the time which may fairly be considered to have been due to difficulties in making out title, and to a controversy as to the form of the conveyance) has arisen entirely from the default of the vendor - default, that is in doing what he could reasonably and fairly have done had he been duly careful to fulfil his contract. So far as the materials before me enable me to judge, the contract might certainly have been carried out, making a liberal allowance for delay in consequence of the difficulties and discussions I have referred to, three months earlier than the actual date of completion."

Since the execution of the agreements there has been no action taken by the defendant to comply with its essential terms. It is hardly a case of proceeding with "reasonable speed" for it has not even got off the ground. It cannot be said that the Plaintiff contributed to the delay.

The following passage from BYRNE J's judgment in GARDINER (supra) sums up the situation as to circumstances in which damages can be claimed when he said dealing with BAIN v FOTHERGILL (1874), L.R. 7 H.L. 158 that ENGELL v FITCH (1869), L.R. 4 Q.B. 659

"... which was considered in Bain v. Fothergill (3), so far as it determines that where the breach of contract arises, not from inability to make a good title, but from refusal to take necessary steps to give the purchaser possession pursuant to the contract, further damages may be recovered, appears to remain good law. Jaques v. Miller (6) is a distinct authority for giving damages against a vendor, in addition to specific performance, in respect of delay caused by wilful refusal to carry out a contract, and for the measure to be applied in ascertaining the damages, namely, such damages as may reasonably be said to have naturally arisen from the delay, or which may reasonably be supposed to have been in the contemplation of the parties as likely to arise from the partial breach of contract. This case was followed in Royal Bristol Permanent Building Society v. Bomash (7)."

What is meant by Deposit?

In this case the Plaintiff had paid the full purchase price for the Lots by way of deposit. In the circumstances of this case in view of the breach of the agreement the Plaintiff was lawfully entitled to rescind the contract. Which he did. On this aspect and in a situation such as this DEANE J in FORAN v WRIGHT [1989] HCA 51; (1989) 168 CLR 385 at 438 said:

"Upon rescission, the purchasers were entitled to obtain restitution of the deposit which they had paid. Their claim for the return of the deposit was not founded on the rescinded contract. Nor did it represent a claim for damages for the vendors' breach of its terms. It was a claim founded in the equitable notions of fair dealing and good conscience which require restitution of a benefit received as, or as part of, the quid pro quo for a consideration which has failed (cf. per Lord Wright, Fibrosa Spolka Akcyjna v Fairbairn, Lawson, Combe, Barbour Ltd. (26); Muschinski v. Dodds (27)). If it be necessary to clothe that claim in a nomenclature, the appropriate one in a modern context is "restitution" for, or of, "unjust enrichment"."

(emphasis added)

The Plaintiff is therefore entitled to recover any deposit or part-payment and in this case the full purchase price together with costs. Normally a deposit is intended to be security for performance by the purchaser and be forfeited if he makes default; and as LORD MACNAGHTEN in SOPER v ARNOLD [1889] UKLawRpAC 35; (1889) 14 App. Cas. 429 at 435 said:

"Everybody knows what deposit is ... it is a guarantee that the purchaser means business".

Here there can be no doubt that the Plaintiff (purchaser) "meant business" when he went beyond paying deposit. Had the contract been performed this payment "shall be brought into account, but if the contract is not performed by the payer it shall remain the property of the payee." (FRY J. in HOWE v SMITH [1884] UKLawRpCh 142; (1884) 27 Ch.D. 89 at 101).

In relation to the present case the following statement from the judgment of BRENNAN J in FORAN (supra) at 432 is apt:

"Upon rescission of the contract, the consideration for which the purchasers had paid the deposit failed totally. The purchasers became entitled to recover the deposit not as damages but in quasi-contract as money paid for a consideration that had totally failed: see Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1942] UKHL 4; (1943) AC 32 esp. at pp.57, 64-66 ..... The purchaser's claim for the deposit was not founded on the contract which they rescinded".

On the question of `deposit' I conclude this aspect with the following passage from the judgment of BOWEN L.J in HOWE (supra) at 97 which is a leading case on the subject of deposit as to matters which ought to be taken into consideration in deciding the rights of a purchaser to the return of the deposit money:

"The question as to the right of the purchaser to the return of the deposit money must, in each case, be a question of the conditions of the contract. In principle it ought to be so, because of course persons may make exactly what bargain they please as to what is to be done with the money deposited. We have to look to the documents to see what bargain was made. If any authority were wanted to prove that in each case it is a question of construction (I do not think it is wanted) it would be found in Palmer v. Temple (1), the case to which Lord Justice Cotton has referred, and which - whatever may be the value of the case as an authority on the construction of the contract in that case, as to which I agree with everything that has fallen from Lord Justice Cotton - adopts the principle that in each case we must consider what was the bargain. At page 520 there is this observation: "The ground on which we rest this opinion is, that in the absence of any specific provision, the question, whether the deposit is forfeited, depends on the intent of the parties to be collected from the whole instrument."

I have applied the above considerations to this case. For the above reasons, I find that the Plaintiff has made out his case for damages. The defendant is therefore liable to refund the full purchase price of £30,625.00 to the Plaintiff.

Applicability of Limitations Act Cap. 35

It is of avail to the defendant to raise this defence. Why should the Plaintiff be deprived of the purchase price which he paid to the defendant in the hope that he will acquire the Lots which he purchased? The defendant must fulfil its obligations under the agreements. I agree with Mr. Knight that the defendant cannot now shelter behind the Limitations Act Cap. 35 which it has not pleaded. In any case, even if it had been pleaded, the limitation period had not expired at the time of the issue of Writ of Summons in September 1992 after the Plaintiff wrote to the defendant on 30 September 1991. I agree with Mr. Knight on his submission that it is not correct for Third Party to say that no notice was given to perform the contracts for the Plaintiff's solicitors did write on 30 September 1991 requiring the defendant to transfer the Lots to the Plaintiff and made time of the essence. It was after a reasonable time had elapsed before the proceedings were commenced on 11 September 1992. I would agree that the contracts remained in force until then and time would have started to run from 30 September 1991.

Because the defendant breached the terms of the contracts, the defendant repudiated them and whilst accepting it the Plaintiff rescinded them and sued for damages.

I find that on the facts of this case the defence of limitation period has no application. As soon as the Plaintiff came to know of the transfer he instituted the present action. This is not the case of an ordinary debt to which the limitation period applied. As Mr. Knight submits, it was the defendant's obligations under the contracts to carry out the necessary engineering work, to subdivide the land and to transfer the lands in question to the Plaintiff were continuing obligations and that there was no specific time referred to in the contracts by which these obligations were to be performed.

The Plaintiff is in my view entitled to recover all damages which may fairly and reasonably be considered as arising naturally, that is, according to the usual course of things, from the breach of contract. (HADLEY v BAXENDALE (1854) 9 Exch 341). The principle established by the Courts as to the nature of damages to flow from a breach of contract was set out in HADLEY (supra) by ALDERSON, B., as follows which I consider apt:-

"Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered as either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it. If special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract which they would reasonably contemplate would be the amount of injury which would ordinarily follow from a breach of contract under the special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could not be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them."

In the case before me, I have no doubt whatsoever that as between the Plaintiff and the Defendant there has been a breach of the terms of the agreements resulting in the non-transfer of the Lots to the Plaintiff for which he had paid the full purchase price.

Claim for interest

The Plaintiff claims interest on the full purchase price on the basis that he did not obtain title to the Lots and was therefore kept out of the use of the money that he paid to the defendant.

Mr. Knight relies on section 3 of the Law Reform (Miscellaneous Provisions)(Death and Interest) Act Cap. 27 which gives the Court a discretionary power to award interest. Also in this case the period for which it is to be given is also discretionary. The Plaintiff is claiming interest from 1 January 1975 at the average rate of 8% per annum.

The defendant is silent on this claim. The Third Party, for the detailed reasons given in Mr. G.P. Shankar's submission, states that interest is not recoverable. I do not find it necessary to set out his arguments here suffice it to say that I have considered them in the light of the authorities.

In view of my findings in this case, and on the authorities, I consider that the Plaintiff is entitled to interest on the full purchase price paid by him but not from the time he is claiming from.

HALSBURY Vol. 32 4th Ed. para 106 states: "Interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owned by another".

Although there is no agreement to pay interest in the contract in case of default, nevertheless, at common law interest is payable where "it can be implied from the course of dealing between the parties or from the nature of the transaction" "in certain cases by way of damages for breach of a contract". (Halsb. ibid para. 108); and where a particular relationship exists, such as vendor and purchaser, as here, there is an equitable right to interest ("and where the purchaser is entitled to rescind the contract and recover his deposit, he is entitled to interest on the deposit" (DAY v SINGLETON [1899] UKLawRpCh 111; (1899) 2 Ch. 320 at 327, C.A.) (Halsb. ibid para 109 n.5).

The principle regarding payment of interest, as enunciated by LORD HERSCHELL LC in LONDON CATHAM and DOVER RLY CO v SOUTH EASTERN RLY. CO [1893] UKLawRpAC 41; (1893) A.C. 429 at 439 which has been repeatedly cited and followed, is:

"...I think that when money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding the money from the other ought not in justice to benefit by having that money in his possession and enjoying the use of it, when the money ought to be in the possession of the other party who is entitled to its use. Therefore, if I could see my way to do so, I should certainly be disposed to give the appellants, or anybody in a similar position, interest upon the amount withheld from the time of action brought at all events."

Now as to the period, the Plaintiff in my view can only claim interest from the time he wrote to the defendant on 30 September 1991 and later came to know that the land was already sold to Third Party. Before that the Plaintiff was not concerned as he did not ascertain the situation. That would be the time when I would say the cause of action arose. The award of interest is a discretionary matter and "among other factors, unreasonable delay by a plaintiff in prosecuting a claim may lead a court not to award interest for the full period from the date of the loss". (McNEILL J. in METAL BOX LTD v CURRYS LTD 1987 QBD 341 at 346). Here it is obvious that the Plaintiff was unconcerned until 1991.

Finally I turn to the question of the rate at which interest is to be paid. Mr. Knight referred the Court to document 8 in the Plaintiff's list of documents, which is Table headed 14 "Selected Rates of Interest in Fiji" for the period 1975 to 1994 a publication of the Reserve Bank of Fiji Quarterly Review. According to Mr. Knight it showed that the average rate of interest paid by Banks in Fiji on one year deposits or less than $250,000 was in the region of 8%. It is submitted that this is the appropriate rate of interest which should be awarded.

In the exercise of my discretion bearing in mind the facts and circumstances of this case interest will be calculated at the figure of 7%. Accordingly that interest is awarded to the Plaintiff from 30 September 1991 to the date of this judgment. It is now a simple matter of mathematics to calculate on the said sum of £30,625.00.

Third Issue: Liability of Third Party to Defendant

On 27 January 1993 the Court made an order, inter alia, on Summons for Third Party Directions, that "the question of the liability of the Third Party to indemnify the defendant be tried at the trial of this action".

Accordingly, I shall deal with this issue now. In considering this aspect of the case I have considered the various legal and other matters raised by Mr. G.P. Shankar in his submissions.

The Agreed Facts on indemnity are as follows:

"In or about 1990 the Defendant pursuant to a Deed dated 20th March 1990 transferred to the Third Party certain property at Pacific Harbour including the said Lots.

By virtue of the said Deed the Third Party indemnified the Defendant against any and all claims of any nature arising out of the Defendant's failure to complete any of the Defendant's covenants or obligations under agreements entered into by the Defendant for the sale of Lots at Pacific Harbour, including the agreements for the sale of the said Lots between the Defendant and the Plaintiff."

The question for my determination is whether upon the facts the defendant as against Third Party has a right to indemnity.

According to my interpretation of the said item, there cannot be any doubt as to Third Party's obligations and liabilities. The Defendant is asking for an order that, if the Plaintiff is successful against his claim, it is entitled to be indemnified by Third Party.

It is the interpretation of item I of the Deed of Indemnity which is most relevant to the issue before me. The said item I reads as follows:-

"MTKKK hereby indemnifies and saves harmless PHDL from all and any liability and against any lawful claims of any nature arising from the date of which MTKKK acquired title and possession of lands in Sections F, J and M, related to the responsibility of PHDL, whether to the buyers of any presold lots, their successors or assignee, any charge holder over such presold lot, the Government or any statutory authority of Fiji or any other person or entity lawfully entitled to either make any claim against PHDL or enforce any scheme plan approval condition or development obligation (whether under the Scheme Plan or any agreement for sale and purchase between PHDL and the buyer of presold lot), in relation to any of the land in Sections F, J and M."

The rights and liabilities of the parties are very clearly set out in that item.

On the right to indemnity I would like to refer to the following passage which is apt from the judgment of the Privy Council delivered by LORD SHAW in EASTERN SHIPPING CO., LTD v QUAH BENG KEE (THIRD PARTY) (1923) Lloyd's L.R 162 at 163:

"A right to indemnity generally arises from contract express or implied: but it is not confined to cases of contract. A right to indemnity exists where the relation between the parties is such that either in law or in equity there is an obligation upon the one party to indemnify the other. There are, for instance, cases in which the state of circumstances is such that the law attaches a legal or equitable duty to indemnify arising from an assumed promise by a person to do that which, under the circumstances, he ought to do. The right to indemnity need not arise by contract; it may (to give other instances) arise by statute; it may arise upon the notion of a request made under circumstances from which the law implies that the common intention is that the party requested shall be indemnified by the party requesting him; it may arise (to use Lord Eldon's words in Waring v. Ward, [1802] EngR 288; 7 Ves. Jun. 332, 336 - a case of vendor and purchaser) in cases in which the Court will "independent of contract raise upon his (the purchaser's) conscience an obligation to indemnify the vendor against the personal obligation" of the vendor. These considerations were all dealt with by the Lords Justices in Birmingham & District Land Co. v. L. & N.W. Railway Co., [1886] UKLawRpCh 243; 34 Ch. D. 261."

I do not find any merit in any of the arguments put forward by Mr. G. P. Shankar on his attack on the Deed of Indemnity to which the Plaintiff is not privy.

It is clear as crystal as to what Third Party's liability to defendant is in regards to, inter alia, the Lots in question. The Third Party did not sign the Deed with its eyes closed. It knew and it ought to have known that the Lots have previously been sold to Plaintiff and possibly to others when it bought the lands from the defendant. I do not accept its argument that there were certain non-disclosures regarding sale of Lots or claim in respect thereof were withheld by defendant from Third Party.

Many of the defences which Third Party raised were in the province of defendant to raise but it did not, and the reason it gave for doing so was to demonstrate that the Plaintiff's claim against defendant must fail. I have already made specific findings in relation to the dealing between the Plaintiff and the Defendant and in the process of doing so I have dealt with on some of the points raised by Third Party in its Amended Defence such as alleged illegality, statute of limitations and the need to give notice.

By transferring the Lots to Third Party the defendants demonstrated that it had no intention of fulfilling its obligations under the agreements and this is fortified by the evidence of its own witness Mr. Vinod Singh that it decided not to subdivide as far back as 1975. The Plaintiff was therefore perfectly justified in rescinding the contract and sue for damages. In these circumstances under the Deed of Indemnity Third Party is liable to indemnify the defendant.

Conclusion

To conclude, for the above reasons I find that the defendant has breached the terms of the agreements. The Plaintiff was therefore entitled to rescind the contracts and claim for the refund of the deposit (being the full purchase price of the Lots). But because the lands (which included the Lots) were transferred to Third Party and a Deed to Indemnity was executed between the defendant and Third Party, the latter bound itself to indemnify the defendant for any amount ordered to be paid by defendant to Plaintiff in this action.

For these reasons the Plaintiff succeeds in his claim. There will therefore be judgment for the Plaintiff against the Defendant in the sum of £30,625.00 together with interest thereon at the rate of 7% per annum from 30th September 1991 to the date of this judgment and costs which is to be taxed unless agreed. There will also be a declaration that Third Party indemnify the defendant in the amount of the said judgment against the defendant and interest as well as costs in the third party proceedings to be taxed if not agreed.

(D. Pathik)
Judge

At Suva
30 April 1997

HBC0407J.92S